2018 (7) TMI 2136 - AT - Companies Law

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - main plea taken by the Appellant is that there was an existence of dispute between the Operational Creditor and the Corporate Debtor - HELD THAT - There was no dispute in existence prior to the 1st demand notice issued under Section 8(1) of the I B Code and the Corporate Debtor disputed the claim about quality only after issuance of 1st demand notice therefore after withdrawal of 1st application under Section 9 on technical grounds and issuance of fresh demand notice the application under Section 9 filed by Respondent was maintainable. Appeal dismissed.

Summary

Issues:
1. Application under Section 9 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Existence of dispute between Operational Creditor and Corporate Debtor.
3. Validity of demand notice under Section 8(1) and subsequent actions.

Analysis:
1. The respondent, an Operational Creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking Corporate Insolvency Resolution Process against the Corporate Debtor. The impugned order admitted the application and imposed a moratorium under Section 14. The appeal was filed by the Director of the Corporate Debtor challenging this order.

2. The main contention raised by the Appellant was the existence of a dispute between the Operational Creditor and the Corporate Debtor. However, the Respondent disputed this claim of a pre-existing dispute.

3. The Appellate Tribunal examined the facts presented, including the issuance of a demand notice under Section 8(1) by the Operational Creditor, which was received by the Corporate Debtor. The Corporate Debtor, in response under Section 8(2), disputed the claim citing differences in supplied goods and pending legal proceedings. Subsequently, the Operational Creditor withdrew the initial application under Section 9 due to a technicality and re-issued a demand notice.

4. After considering the sequence of events, the Tribunal found that there was no dispute existing before the first demand notice under Section 8(1) was issued. The Corporate Debtor raised quality concerns only after receiving the initial notice, leading to the withdrawal of the first application and the subsequent re-issuance of the demand notice.

5. Based on the findings, the Tribunal concluded that the application under Section 9 filed by the Respondent was maintainable. The appeal by the Director of the Corporate Debtor was dismissed as the Tribunal found no merit in the arguments presented. No costs were awarded in this matter.

This detailed analysis of the judgment highlights the key issues of the case, the arguments presented by the parties, and the Tribunal's reasoning leading to the final decision to dismiss the appeal.